Blue Apron stock jumps again on CEO transition, but not all analysts are convinced

EmilyBary

Investors haven’t found much reason to be hopeful about Blue Apron Holdings Inc. since the company went public in late June, and analysts are mixed on whether the newly announced leadership transition will be a recipe for success.

Blue Apron
APRN, +6.73%
shares have rocketed 30% since the company said Thursday that co-founder and CEO Matt Salzberg would be stepping down from the top role. The company’s CFO, Brad Dickerson, has taken as CEO, while Salzberg will move to the chairman position.

Dickerson came to Blue Apron last year after serving as both the chief operating officer and the chief financial officer at Under Armour Inc.
UAA, +2.31%
for more than a decade. His “operational” background is one reason Barclays analysts view Dickerson’s appointment as a “positive” for Blue Apron shareholders.

Barclays upgraded Blue Apron shares to equal weight from underweight on Monday, citing Dickerson’s ascent as well as the company’s recently announced improvements at its new fulfillment center in Linden, N.J. The analysts said there was also a possibility that Blue Apron gets bought out, providing a further boost to the shares.

The stock ran up 19% in active afternoon trade. Volume swelled to over 9.9 million shares, which was more than four times the full-day average.

Needham analyst Kerry Rice also expressed optimism regarding both the CEO change and the Linden margins, writing Friday that Blue Apron “could benefit from Dickerson’s seasoned experience in leading a multibillion-dollar consumer brand, particularly in improving operational efficiency and working with public markets.” He believes Blue Apron’s fulfillment efforts are back on track.

Blue Apron has been in the process of shifting operations from one New Jersey fulfillment center to another, which has proved challenging. In the third quarter, the Linden fulfillment center had weaker margins than its other centers. But Blue Apron said in the Thursday filing announcing the CEO change that Linden’s margins have “significantly improved” and that the center’s “on-time in full” rates, which measure accuracy of orders, are in line with those at its other facilities.

Not all are convinced that Blue Apron’s stock will benefit as a result of the shake-up. The team at RBC Capital downgraded the stock to sector perform on Monday. “Brad Dickerson may very well prove to be a successful CEO, but at the margin we view the management change as implying less visibility and certainty into Blue Apron’s fundamentals,” they wrote. “Frankly, the level of operational, fundamental and management volatility since its IPO is the most we have witnessed among any internet stock…hence the downgrade.”

SunTrust Robinson Humphrey analyst Youssef Squali, who has a hold rating on shares, agreed that there are still challenges ahead. To start, a lockup expiration on Dec. 26 will give insiders an opportunity to sell their shares. Read more about lockup expirations.

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